British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — British American Tobacco Industries, p.l.c. — FY2024 Earnings Presentation
52 slides from British American Tobacco P.l.c's earnings presentation, Feb 13, 2025
Slide 1: Building a Smokeless World
Building a Smokeless World Preliminary Results 2024 Tadeu Marroco – Chief Executive | Soraya Benchikh – Chief Financial Officer
Slide 2: Important Information
Important Information The information contained in this presentation in relation to British American Tobacco p.l.c. (“BAT”) and its subsidiaries has been prepared solely for use at this presentation. The presentation is not directed to, or intended for distribution to or use by, any person or entity
Slide 3: Important Information
Important Information Forward-looking Statements (continued) Additional information concerning these and other factors can be found in BAT’s filings with the U.S. Securities and Exchange Commission (“SEC”), including the Annual Report on Form 20-F and Current Reports on Form 6-K, which may be obtain
Slide 4: 2024 investment driving positive momentum
2024 investment driving positive momentum Preliminary Results 2024 Tadeu Marroco – Chief Executive
Slide 5: Driving a sustainable transformation in 2024
Driving a sustainable transformation in 2024 ▪ Results delivered in line with guidance ▪ Investments driving Combustibles recovery in U.S. ▪ Continued robust delivery in AME and APMEA ▪ Progress towards a Smokeless world A Better ▪ Consumers of Smokeless* products up 3.6m to 29.1m Tomorrow ▪ Smokele
Slide 6: Targeted investment year in 2024
Targeted investment year in 2024 What we said What we delivered Goal: Strengthen our U.S. business FY24 Combustibles volume and value share recovery Action: Investments in our U.S. commercial plans: ▪ Led by premium ▪ Adjusted price indices and laddering strategy ▪ Previously announced commercial in
Slide 7: FY24 results in-line with expectations
FY24 results in-line with expectations Preliminary Results 2024 Soraya Benchikh – Chief Financial Officer
Slide 8: My areas of focus
My areas of focus 1 2 3 4 Fuelling Disciplined targeted Strengthen Balanced transformation capital deployment financial resilience capital allocation ▪ Drive Combustibles ▪ Target largest ▪ Strong balance ▪ Progressive dividend value NC profit pools sheet ▪ Sustainable share ▪ Quality growth ▪ Laser
Slide 9: FY24 performance in line with expectations
FY24 performance in line with expectations Group New Category Profit from Diluted Earnings per Revenue Revenue Operations Share Reported £25,867m £3,432m £2,736m 136.0p FY23: FY23: FY23: FY23: £27,283m £3,347m (£15,751m) (646.6p) -5.2% +2.5% n/m^ n/m^ Adjusted +1.3%* +8.9%* +1.4%** +3.6%** Organic C
Slide 10: Organic adjusted results in line with guidance
Organic adjusted results in line with guidance** Revenue* Adjusted gross profit^^^ Adjusted profit from operations** Adjusted diluted EPS** (£bn) (£bn) (£bn) (pence) +1.3% +2.2% +1.4% +3.6% vs. FY23 vs. FY23 vs. FY23 vs. FY23 27.2 18.2 12.4 368.5 381.9 26.8 17.9 12.3 FY23 FY24 FY23 FY24 FY23 FY24 FY
Slide 11: Delivering Quality Growth in New Categories
Delivering Quality Growth in New Categories Revenue* Adjusted gross profit/margin** Category contribution*** Return on investment^ (£bn) (£bn/%) (£m) (%) +8.9% +19.8% 7.1% +14.6ppts vs. FY23 Contribution vs. FY23 vs. FY23 margin 55.7% 50.6% 251 14.6% 3.3 3.6 2.0 1.6 0.0% Contribution margin 0 0 0.0%
Slide 12: Vuse: Maintains global value share leadership
Vuse: Maintains global value share leadership*; illicit headwinds persist in the U.S. and Canada Value share leadership in Top markets Revenue** impacted by illicit headwinds and Value share gains across majority of Top maintained* lack of enforcement markets in Europe*** 55.4% 14.4% 29.4% -120bps +
Slide 13: glo: Innovation drives H2 performance acceleration
glo: Innovation drives H2 performance acceleration Early signs of volume share* recovery vs. FY23 New innovations and improved consumables Hyper Pro continues to grow volume share driving revenue** momentum partially offsetting decline in legacy consumables* -110bps Volume share -40bps 16.4% Volume
Slide 14: Velo: Strong category growth and continued AME leadership
Velo: Strong category growth and continued AME leadership* Continued volume share*** gains Strong revenue** growth #1 in AME with 64.7% volume share* 57.6% 63.2% 88.5% +130bps +200bps +0.6ppts -0.5ppts -1.8ppts Volume share Volume share of Modern Oral of Total Oral SWE NOR DNK FY24 vs. FY23 FY24 vs.
Slide 15: Combustibles: AME and APMEA growth offset by the U.S.
Combustibles: AME and APMEA growth offset by the U.S. Key drivers Combustibles organic revenue** growth by region and globally ▪ Volume share* +20bps AME APMEA U.S. Group ▪ AME +20bps, APMEA +40bps and U.S. flat ▪ Value share* -20bps driven by the U.S. ▪ AME flat, APMEA flat 3.6% 3.5% ▪ U.S. -30bps
Slide 16: U.S. H2 performance acceleration as expected
U.S. H2 performance acceleration as expected Combustibles revenue* New Category revenue* Total revenue* Adjusted profit from growth growth growth Operations** growth 4.6% 2.2% -3.4% -2.6% -3.5% -4.1% -4.8% -6.1% Inventory adjustment^ Inventory Inventory adjustment^ -5.1% adjustment^ -6.7% -8.5% HY24
Slide 17: AME: Continued strong delivery
AME: Continued strong delivery Combustibles revenue* New Category revenue* Total revenue* Adjusted profit from growth growth growth operations** growth +16.0% vs. FY23 15.8% 11.9% 7.5% 5.4% 4.9% 5.3% 3.0% 3.6% HY24 FY24 HY24 FY24 HY24 FY24 HY24 FY24 Financial growth vs. HY23, FY23 as applicable. * O
Slide 18: APMEA: H2 improvement as expected
APMEA: H2 improvement as expected Combustibles revenue* New Category revenue* Total revenue* Adjusted profit from growth growth growth operations** growth 8.6% 7.5% 5.4% 3.5% 3.8% 1.2% 1.8% -3.3% HY24 FY24 HY24 FY24 HY24 FY24 HY24 FY24 Financial growth vs. HY23, FY23 as applicable. * On a constant r
Slide 19: Group operating margin: offsetting FX and inflationary headwinds
Group operating margin: Successfully offsetting transactional FX and inflationary headwinds with NCs and efficiency gains flat* +0.2%** * On an organic, adjusted constant rate basis. See Appendices A1, A2 & A7. ** On an organic, adjusted basis. See Appendices A1 & A7. 19
Slide 20: Increasing agility and productivity savings
Increasing agility and productivity savings Continued focus on efficiencies Strengthening our resilience >£1.2bn Offsetting headwinds and reinvesting in c.£2bn Productivity savings expected Quality Growth Additional productivity savings 2023-2025 2026-2030 ▪ c.£870m savings delivered to ▪ Headwinds
Slide 21: Adjusted organic diluted EPS up 3.6%
Adjusted organic diluted EPS up 3.6%* Organic adjusted current** -1.6% +3.6% FX headwind Organic adjusted constant* -5.2% . * Adjusted diluted EPS on an organic, constant rate basis. See Appendices A1 , A2 & A7. **Adjusted diluted EPS on an organic, current rate basis. See Appendices A1 & A7. 21
Slide 22: Continued strong operating cash conversion
Continued strong operating cash conversion Strong Operating Cash Short Term Bond Maturity Leverage Reduced to 2.4x Conversion* Profile Adjusted net debt / £ in billions adjusted EBITDA** 100% 100% 101% 2.9 3.3 3.1 2.5^ 2.6 2.4 FY22 FY23 FY24 FY22 FY23 FY24 Due'25 Due'26 Due'27 £2.4bn Bi-laterals 9.5
Slide 23: We support the Canadian CCAA proposed plans
We support the Canadian CCAA proposed plans P&L accounting treatment ▪ We continue to fully consolidate our Canadian business in accordance with IFRS ▪ Recognised £6.2bn provision for full settlement in our FY24 reported results, treated as an adjusting item in line with our accounting policies In o
Slide 24: Dynamic approach to capital allocation as we transform
Dynamic approach to capital allocation as we transform Cash generation Generate in excess of £50bn* Free Cash Flow** by 2030 Deliver business transformation Targeted investment in business transformation Optimise portfolio Continuously review our footprint and drive cash flows Progressive Within 2.0
Slide 25: Significant 2025 Combustibles headwinds expected in APMEA
Significant 2025 Combustibles headwinds expected in APMEA Excise hike in Tobacco regulations and Bangladesh excise in Australia • On 9 January 2025, the interim government of Bangladesh, • Full National Tobacco Strategy (NTS) compliance for under IMF guidance, issued a special ordinance increasing m
Slide 26: FY25 deployment is the next step towards mid-term growth algorithm
FY25 deployment is the next step towards delivering our mid-term sustainable growth algorithm FY25 Guidance Key +/- drivers ▪ Improving U.S. financial performance c.1% ▪ ▪ Further Velo growth momentum Innovations in market for all three New Categories Revenue Growth* ▪ Continued strong performance i
Slide 27: Our 2026 sustainable growth algorithm
Our 2026 sustainable growth ance d capital allocat ion Bal algorithm supported by metrics d tran sformation & Fun reholder returns sha 1 CO bn low rev Qu S 0 op 5 hf ^ en al >£ as 30 u i tim 3- e ^ c 20 ty ow 5% n^ D sa isa eli gs by 2 gr * y vin e sio fre ver tion b ver ital 5 c.£2 30 th >90% cash
Slide 28: Measuring our transformation
Measuring our transformation What we measure How we measure it 2023 2024 1 Are we growing revenue? Revenue growth (%) +3.1% +1.3% 2 Are we transforming? Smokeless revenue/total revenue (%) 16.5% 17.5% Are we delivering value as we grow? Adjusted gross profit growth3 (%) +2.8% +2.2% Is the transforma
Slide 29: Confident in our sustainable transformation
Confident in our sustainable transformation Preliminary Results 2024 Tadeu Marroco – Chief Executive
Slide 30: Why invest? 10 key reasons to believe in BAT's future
Why invest? 10 key reasons to believe in BAT’s future 1. 2. 3. 4. 5. Industry Multi-category is a Transformed insights Enhanced innovation Our Quality Growth transformation will reality: positioned & foresights ecosystem delivering strategic imperative deliver long-term for success in all capabiliti
Slide 31: 10 key reasons to believe in BAT's future
10 key reasons to believe in BAT’s future 1. 2. 3. 4. 5. Industry Multi-category is a Transformed insights Enhanced innovation Our Quality Growth transformation will reality: positioned & foresights ecosystem delivering strategic imperative deliver long-term for success in all capabilities to a step
Slide 32: Industry transformation is accelerating nicotine value growth
Industry transformation is accelerating nicotine value growth Nicotine revenue CAGR expected to outpace the pre-transformation era 2024-2035** 2017-2023* ~3.8% ~4.6% CAGR CAGR * Total Nicotine revenue on an organic, constant rate basis. See Appendices A2 & A7. | Key industry players based on publish
Slide 33: Innovation ecosystem – glo Hilo
Enhanced innovation ecosystem delivering a step change in our product portfolio in 2025 – glo Hilo • New Heating Technology – More heat for great taste • Authentic tobacco or intensely flavourful tobacco-free sticks • Standard and Boost modes for customised experience • Stay in perfect control with
Slide 34: Innovation ecosystem – Vuse Ultra
Enhanced innovation ecosystem delivering a step change in our product portfolio in 2025 – Vuse Ultra Roll-out Commencing H1’25 Premium design with tech-led features New FlavourMax Technology CloudControl features Intuitive screen & app to keep consumers informed Lock/unlock features; removable batte
Slide 35: Innovation ecosystem – Velo Plus
Enhanced innovation ecosystem delivering a step change in our product portfolio in 2025 – Velo Plus H1’25 Distribution expansion to c.110k outlets • Portfolio expansion with broad range of flavours and nicotine levels • Encouraging off-take / evidence of growing adult consumer demand & trial • Drivi
Slide 36: More than 1/3 of nicotine consumers in Europe use New Categories
More than 1/3 of nicotine consumers in Europe are actively using New Categories 36% of adult nicotine consumers are actively using Vapour has the most solus consumers New Categories (NC) Industry Europe (T14) Adult Nicotine Consumers HP VAPOUR MO 12% 15% 16% 18% 19% 10% 13% 15% 17% 17% 24% 41% 39% 5
Slide 37: New Categories is a game changer in Europe
New Categories is a game changer in Europe NC revenue % of total 26% NC NC revenue % Total revenue contribution* of total CAGR ‘21-’24 ‘24 vs. ’23 Poland 58% +22% +330% Italy 45% +4% +37% Sweden 68% +16% +44% 2021 2022 2023 2024 Total Revenue NC Revenue Czech 47% +14% +386% +7% +177% Total revenue N
Slide 38: The U.S. remains the cornerstone of our future
The U.S. remains the cornerstone of our future Continued share gains in Increased contract coverage Newport laddering Super-Premium and Branded Value ▪ Volume share +3.2ppts* in newly ▪ Targeted introduction of soft-pack • Lucky Strike remains the fastest contracted outlets** driving a recovery in N
Slide 39: U.S. deep discount segment growth slowing
U.S. deep discount segment growth slowing; branded value continues to gain Deep discount segment volume share of U.S. market 14.0 12.3 Apr Apr Mar Mar Jan Feb May Nov Jan Feb May Nov Jun Jul Oct Jun Dec Jul Oct Dec Aug Aug Sep Sep FY23 vs. 2023 2024 Volume Share FY24 vs. FY23 39 FY22 Deep discount s
Slide 40: Our U.S. commercial plans are working
Our U.S. commercial plans are working Premium segment volume share* Continued volume and value share recovery* 45.2 44.6 44.7 44.8 43.1 Volume share bps FY23 vs. FY22 FY24 vs. FY23 Total U.S. Combustibles -10 flat Total Combustibles volume share excl. deep discount* 39.6 39.1 39.0 Excl. deep discoun
Slide 41: The U.S. regulatory environment is evolving
The U.S. regulatory environment is evolving Federal regulatory State illicit Continued PMTA progress actions enforcement New Administration Alto Tobacco Marketing ▪ 30% of the tracked vapour industry volume will be covered by state directories by the end ▪ Tobacco Product Standard for Menthol in Gra
Slide 42: Continued proactive approach to Tobacco Harm Reduction
Continued proactive approach to Tobacco Harm Reduction (THR) Leveraging our established capabilities Driving increased engagement and dialogue 1. 2. 3. Insights & Defined policies Evidence-based horizon planning & principles positions Understand regulatory Maximise THR and Consolidated science and t
Slide 43: Making BAT the place to be through culture transformation
Making “BAT the place to be” through our culture transformation Values activation survey in 2030 PEOPLE STRATEGY Employee engagement high and June 2024 – employee feedback surpassing FMCG norm Fully support our refreshed 94% Values (+3ppts vs. FMCG norm) 84% 43 Have confidence in our 89% leadership
Slide 44: 2025 Deployment Year priorities
2025 Deployment Year priorities ▪ Targeted roll out of innovations in all three New Categories ▪ Increasing NC returns on more focused investment A Better Tomorrow ▪ Drive value from Combustibles Building a Smokeless* Switch ▪ Further improvement in our U.S. delivery to Better World ▪ Amplify proact
Slide 45: Confident in delivering mid-term Growth Algorithm in 2026
Confident in delivering our mid-term sustainable Growth Algorithm in 2026 2025 2026 Deployment Sustainable year mid-term growth Revenue Growth* c.1% 3-5% APFO (Adjusted for Canada) Growth** 1.5-2.5% 4-6% ▪ Improving U.S. financial performance ▪ Improving U.S. financial performance ▪ Further Velo gro
Slide 46: Q&A
Q&A Preliminary Results 2024 Tadeu Marroco – Chief Executive | Soraya Benchikh – Chief Financial Officer Have you downloaded the new BAT Investor Relations App? Available now to download for free to access live share prices, presentations, news, webcasts, create your own watchlist and download conte
Slide 47: Appendix
Appendix Preliminary Results 2024 Have you downloaded the new BAT Investor Relations App? Available now to download for free to access live share prices, presentations, news, webcasts, create your own watchlist and download content for offline use. https://myirapp.com/bat/
Slide 48: Appendix: Our volume shares in Top markets
Appendix: Our volume shares in Top markets* Cigarettes Volume share of Vuse Value share glo Volume share Velo Volume share Volume share Cigarettes of Total Vapour of HP of Total Oral of Modern Oral FY24 Change FY24 Change FY24 Change FY24 Change FY24 Change volume FY24 vs. value FY24 vs. volume FY24
Slide 49: Appendix: Organic Group Results excl. Russia/Belarus
Appendix: Organic Group Results excl. Russia/Belarus Total Organic Group Organic Group Organic Growth Group Growth FY24 FY23 FY24 vs. FY23 FY24 vs. FY23^ Volume 526bn 553bn -4.8% -9.0% FMC & HP (£ Millions) (£ Millions) Revenue* 27,151 26,804 1.3% -0.5% NC Revenue* 3,551 3,260 +8.9% +6.1% APFO** 12,
Slide 50: Appendix: FY24 Group results (adjusted for Canada)
Appendix: FY24 Group results (adjusted for Canada) Adjusting Adjustment As adjusted For year ended 31 December 2024 (£m) Reported Adjusted* items for Canada for Canada* Profit from Operations U.S. 4,087 2,299 6,386 - 6,386 AME -3,464 6,784 3,320 -520 2,800 APMEA 2,113 71 2,184 - 2,184 Total Region 2
Slide 51: Appendix: Non-GAAP Measures Reconciliation
Appendix: Non-GAAP Measures Reconciliation Adjusted Profit from Operations 2024 2023 Years ended 31 December £m £m Profit/(loss) from operations 2,736 -15,751 Add: Restructuring and integration costs - -2 Amortisation and impairment of trademarks and similar intangibles 2,279 23,202 Impairment of go
Slide 52: Appendix: Definitions
Appendix A1: Adjusting (Adj.) Adjusting items represent certain items which the Group considers distinctive based upon their size, nature or incidence. A2: Constant currency Constant currency – measures are calculated based on the prior year's exchange rate, removing the potentially distorting effec
British American Tobacco Industries, p.l.c. — FY2024 Earnings Presentation on 6ix